Priority areas as Tanzania’s Budget set to jump by Sh5 trillion

Dar es Salaam. At least seven areas will get the lion’s share of budget funds in the 2024/25 financial year, when spending is projected to rise by about Sh5 trillion.

Tabling the 2024/25 Budget Framework before MPs in Dodoma on Monday, Finance minister Mwigulu Nchemba said the Budget will  increase by 11.2 percent from Sh44.4 trillion currently to Sh49.346 trillion.

A sizeable slice will go towards servicing of the government’s debt, payment of civil servants’ salaries, this year’s local government elections, preparations for the 2025 General Election and payments of arrears owed to contractors and service providers.

Read: Tanzania allocates Sh10.5 trillion to service national debt

Dr Nchemba said the government will also set aside funds for the rehabilitation of existing and construction of new stadia as part of preparations for the 2027 Africa Cup of Nations (Afcon) finals, which Tanzania will jointly host with Kenya and Uganda.

The 60,000-seat Benjamin Mkapa National Stadium in Dar es Salaam is already certified for Africa’s premier football showcase and is currently undergoing repairs to ensure it is up-to-date with requirements of the Confederation of African Football (CAF).

Chamazi Complex in Dar es Salaam, CCM Kirumba Stadium in Mwanza and some stadia in Dodoma, Arusha and Zanzibar are other venues the government will consider upgrading to CAF standards.

Dr Nchemba told lawmakers that part of the development budget will be directed towards implementing ongoing projects.

“These include national strategic projects and those that will be implemented under PPPs (public-private partnerships),” he said.

The Minister of State in the President’s Office (Planning and Investment), Prof Kitila Mkumbo, said the government will in 2024/25 intensify efforts to ensure the timely completion of flagship projects that are currently in their final stages.

Some of the mega projects the government is implementing include the multi-billion-dollar standard gauge railway (SGR), expansion of the Air Tanzania Company Limited (ATCL) fleet, the 2,115MW Julius Nyerere Hydropower Project, several flyovers and bridges, second phase of the bus rapid transit (BRT) infrastructure in Dar es Salaam, East African Crude Oil Pipeline (Eacop), liquefied natural gas (LNG) plant in Lindi Region, as well as the 3.2-kilometre Kigong-Busisi Bridge in Mwanza Region.

Prof Mkumbo said the aim was to align government revenue and expenditure realistically to achieve the expected outcomes of project implementation during the completion period of Vision 2025 and the Third Five-Year Development Plan (FYDP III 2021/22-2025/26).

“The objective of the National Development Plan for 2024/25 is to continue to stimulate inclusive economic growth, reduce poverty, promote prosperity for all, generate jobs and stimulate exports of value-added products,” he added.

This aligns with what Dr Nchemba said with regard to the allocation of development funds in 2024/25, where priority will be given to ongoing projects, including strategic and flagship initiatives.

The government plans to set aside Sh33.55 trillion and Sh15.78 trillion for recurrent and development expenditure, respectively.

“Development funds include a development grant of Sh1.23 trillion to finance loans for students in tertiary and higher education, as well as the offering of primary and secondary education without fees,” Dr Nchemba said.

The government expects 70.1 percent of the Budget to be financed by domestic revenue, which is projected to increase by ten percent in 2024/25.

Dr Nchemba underscored the importance of improving domestic revenue collection, citing it as a reliable and no-strings-attached source of financing for government budgets.

“With the bulk of the Budget to be funded through domestic revenue, the government will continue to prioritise and intensify efforts to strengthen domestic revenue collection,” he said.

The government has pegged 2024/25 collections by the Tanzania Revenue Authority (TRA) at Sh29.85 trillion, non-tax revenues collected by ministries, institutions and self-reliant departments at Sh3.4 trillion and local government authorities revenues at Sh1.34 trillion.

2024/2025 development plans targets

Earlier, Prof Mkumbo said the government plans to accelerate GDP growth to 5.4 percent in 2024 and control inflation within single digits of between three and seven percent in the medium term.

“Domestic revenue is projected to increase to 15.7 percent of GDP in 2024/25 compared to the expected 15.3 percent in 2023/24. Tax revenue is projected to reach 12.8 percent of GDP in 2024/25 from the expected 12.5 percent in 2023/24.”

Prof Mkumbo added that the government projects the budget deficit to be 2.9 percent of GDP in the next financial year and expects foreign exchange reserves to be at levels sufficient for the import of goods and services for at least four months.